As the economy moves to a more expansionary phase, lenders are easing credit standards and many consumers are looking to purchase “big ticket” items such as appliances and autos or make major home repairs.

This pent up demand and seemingly mad rush to buy can cause some people to make financial decisions that can take years to unravel.

Why do so many well-meaning people make big money mistakes?


In their book, “Why Smart People Make Big Money Mistakes” Gary Belsky and Thomas Gilovich describe Behavioral Economics as combining “the twin disciplines of psychology and economics to explain why and how people make seemingly irrational or illogical decisions when they spend, invest, save, and borrow money.” I tend to agree with the authors’ basic premise; however in working with real clients, I have found five common money mistakes that many people make.

Big money mistakes

No goals—The first big money mistake is not having clearly defined family financial goals. Having clear goals guides the financial decision making process in both the short and long term. The first step is to sit down with your family and discuss your short, medium and long-term financial goals. Write down your goals and review them at least quarterly. If you can think it, then you can ink it!

Procrastination—Is the next most common big money mistake. It stops most people dead in their tracks, because they just don’t do anything to achieve their financial goals.

We’ve all heard the sayings, “talk is cheap” and “time is money.”

Well, procrastination costs money and wastes valuable time that cannot be made up. Start right now to work on achieving your financial goals—tomorrow may be too late!

The Jones—The media constantly bombards us with the message that “keeping up with the Jones’ is American as apple pie.” We are pressured to play a never-ending game of comparing ourselves with others who live the “good life.” If only we had a bigger house or a fancier car or whatever gadget that’s in vogue, then we would be happy! Well, we must have the strength and courage to realize that, “our road to financial success is our own road.” Set your course to financial success, work hard and quite frankly forget about what other people say they have or do.

Credit Card Debt—Credit card debt goes hand in hand with, “keeping up with the Jones” creating a mammoth big money mistake. Use this simple rule, “if you can’t afford to pay for something within the next thirty days—don’t use your credit card to buy it.” If you have current credit card debt, first don’t add to it and then figure out a way to pay it off within the next 12 months. Don’t let credit card debt prevent you from achieving financial success.

Financial Literacy—Too many people lack a basic understanding of how the financial world works. This lack of understanding makes them either easy prey for financial schemes or extremely cautious, to the point that they don’t do anything. Most Americans will spend more time in a week watching television (20 hours) than they will spend in a year working on or educating themselves about their personal finances. Go to the public library and read investment books, magazines and newspapers. Watch the daily financial news reports on television. Basic financial awareness will help you avoid this money mistake.

Your financial journey

Avoiding the big money mistakes, doesn’t necessarily assure that you will achieve financial success. You may need the help of a financial advisor. A competent advisor will analyze your current situation and help you to develop and implement a strategy to work toward your financial goals. It has been said that, “Yesterday is history, Tomorrow is a mystery, but Today is a gift, that’s why it’s called the present.” Don’t waste your present, start today!

(Michael G. Shinn, CFP, registered representative of and securities and investment advisory services offered through Financial Network Investment Corporation, member SIPC. Visit http://www.shinn­ for more information or to send your comments or questions to

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